Photo by: Bloomberg
KOLKATA (miningweekly.com) – The overseas exploration arm of Indian major ONGC Limited, ONGC Videsh Limited (OVL), has started negotiations with Petroleos Mexicanos (Pemex), Mexico’s national oil company, for a stake in oil and gas assets in Central and Latin America.
According to a senior ONGC official, the OVL-Pemex talks followed a push by the Indian government to have its national oil companies deepen their footprints in the region following the Mexican government’s recent reforms in the sector, including extending an invitation for foreign direct investments in exploration and production assets.
While the official declined to identify the assets on OVL’s radar he said that Pemex had announced its intention to firm up at least ten joint ventures (JVs) across explored and established oil and gas assets by 2015.
Negotiations between the national oil companies of the two countries were expected to push for a definitive agreement by November 2014, so that the proposed JVs would be ready for auction of the assets scheduled for next year by the Mexican government.
He said that following the reforms of the Mexican oil and gas sector, companies like OVL along with other foreign majors would now be permitted to get into profit-sharing agreements, in JVs, for assets controlled by Pemex.
Citing media reports from Mexico, the official said that the Mexican government’s offers for offshore and onshore fields held an estimated 20-billion barrels which could sustain production capacities of 2.5-million barrels per day for 20 years.
At present, neither OVL nor any other Indian oil and gas companies had a presence on the Central American country as the country had not previously permitted private investments in the sector.
Even as OVL and Pemex had started talks and identified possible assets for JVs, a final agreement would wait until the Mexican government firmed up a model contract, fiscal regime and production sharing models, the official added.
The production sharing agreements would be crucial in inking prospective JVs with Pemex considering that India’s imports of crude oil from Mexico had rocketed 161% over the last five years to around 98 000 bbl/d.
The Indian government, after assuming office earlier this year, had come down heavily on the slow pace of overseas oil and gas acquisition and directed national government-owned companies like ONGC and Indian Oil Corporation to increase their efforts to secure presence overseas.
OVL marked its overseas presence in 2013/14 through $5-billion in acquisitions, which included buying 10% equity in Rovuma oil and gas fields in Mozambique, held by Indian conglomerate Videocon, for $2.48-billion, and another 10% equity in the same region from Anadarko Petroleum of the US for $2.64-billion.